In-Depth Analysis of the Cost Transmission Mechanism of Surging Sulfur Prices on the Phosphate Fertilizer Industry

Based on the above research and analysis, I am providing you with a systematic research report on

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Sulfur prices have experienced a sharp increase since the second half of 2024:

Time Node	Sulfur Price (RMB/ton)	Notes
July-September 2024	850-950	Bottom Range
Q1 2025	900-1200	Moderate Increase
Q2 2025	1200-1800	Accelerated Increase
Q3 2025	1800-2800	Continuous Climb
Q4 2025	Over 4000	Record High
Cumulative Increase	+371%	Zhenjiang Port Granular Sulfur

The core driving force behind this round of increases comes from the strong performance of the external market. As the largest downstream consumption sector of sulfur, the fertilizer industry has been significantly affected by cost transmission [1].

• Middle East Production Cuts:
  OPEC decided to suspend production expansion and plan additional production cuts in Q1 2026. The decline in Iran’s crude oil production has led to a reduction in by-product sulfur [1]
• Shift in Russia’s Role:
  Once a major sulfur exporter, Russia has now become a net importer, exacerbating global supply tightness [1]
• Domestic Refinery Maintenance:
  Intensive maintenance of domestic refineries and coal-to-chemical units in the second half of 2025 has tightened supply [1]

• Emerging Demand Rise:
  Nickel hydrometallurgy projects represented by Indonesia have significantly driven the growth of sulfur-based sulfuric acid production capacity, becoming a major factor supporting the rise of international sulfur prices [1]
• Rigid Demand for Phosphate Fertilizer:
  Global phosphate fertilizer demand remains stable, with seasonal procurement for spring ploughing increasing

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┌─────────────────────────────────────────────────────────────────┐
│                      Sulfur → Phosphate Fertilizer Cost Transmission Chain                          │
├─────────────────────────────────────────────────────────────────┤
│                                                                 │
│   Sulfur         Sulfuric Acid         Phosphate Ore         Liquid Ammonia         Phosphate Fertilizer    │
│  (Raw Material 1)      (Raw Material 2)       (Raw Material 3)       (Raw Material 4)      (Final Product)   │
│                                                                 │
│    ↓            ↓             ↓             ↓            ↓      │
│  3.15x Price Increase        2x Transmission           Benchmark Stable           RMB 200-300 Increase Per Ton          Cost Increase    │
│                                                                 │
│  ┌─────────────────────────────────────────────────────────┐   │
│  │  Comprehensive Transmission Formula: For every RMB 100/ton increase in sulfur price → phosphate fertilizer cost increases by RMB 45/ton │   │
│  └─────────────────────────────────────────────────────────┘   │
└─────────────────────────────────────────────────────────────────┘

According to industry data, the production cost structure of phosphate fertilizer (DAP) is as follows:

Cost Item	Proportion	2025 Change	Impact on Total Cost
Sulfuric Acid	30%	+RMB 900-1,000/ton	Dominant Factor
Phosphate Ore	35%	Relatively Stable	Benchmark Cost
Liquid Ammonia	20%	+RMB 200-300/ton	Combined Impact
Manufacturing Overhead	10%	Slight Increase	Marginal Impact
Other	5%	Stable	Limited

• Sulfur prices have risen from RMB 850/ton to RMB 4,000/ton, an increase of RMB 3,150/ton
• Based on the transmission coefficient of 0.45, phosphate fertilizer costs have increased by approximately RMB 1,418/ton
• Combined with increases in other raw materials such as liquid ammonia,
  total cost has increased by about RMB 1,000-1,500/ton
  [1][2]

1. Sulfur → Sulfuric Acid:
   1 ton of sulfur can produce approximately 3 tons of sulfuric acid
2. Sulfuric Acid → Phosphate Fertilizer:
   1 ton of phosphate fertilizer (DAP) consumes approximately 0.45 tons of sulfuric acid
3. Comprehensive Transmission Coefficient:
   0.45 ÷ 3 × 3 ≈ 0.45 (i.e., for every RMB 100 increase in sulfur price, phosphate fertilizer cost increases by RMB 45)

According to calculations by Liu Zhenpeng, a sulfur analyst at Zhuochuang Information, based on process consumption ratios, for every RMB 100/ton increase in sulfur price, the production cost of phosphate fertilizer increases by approximately RMB 45/ton [1].

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, as a leader in the phosphate fertilizer industry, has a representative response:

“Due to the impact of rising sulfur prices on sulfuric acid, a key raw material for phosphate fertilizer production, the cost per ton of phosphate fertilizer has increased by around RMB 1,000. Cost pressures have led to meager profits or even losses for phosphate fertilizer enterprises.” [1]

Indicator	Value	Industry Comparison
Market Capitalization	USD 63.66 billion	Largest in the phosphate fertilizer industry
ROE	24.29%	Excellent Level
Net Profit Margin	10.76%	Relatively Stable
P/E	11.29x	Reasonable Valuation

Despite enormous cost pressures, Yuntianhua has maintained strong profitability through scale effects and industrial chain integration.

Impact Dimension	Specific Performance
Operating Rate	Some enterprises have been forced to reduce production capacity; DAP output in 2025 was approximately 13.35 million tons, a year-on-year decrease of about 6%
Profit Margin	Supply guarantee and price stabilization policies limit the increase in phosphate fertilizer prices, compressing enterprise profits
Export Willingness	Tightened export quotas + high costs have led enterprises to prioritize domestic supply
Inventory Level	DAP inventory continues to decline, and market supply is tight

stated on the investor interactive platform that the company hedges cost risks through its sulfur chemical layout:

• 500,000 tons/year sulfuric acid plant supporting the De’a Project
• 300,000 tons/year sulfuric acid plant supporting the Panzhihua Project
• Existing 900,000 tons/year sulfuric acid plant
• 500,000 tons/year sulfuric acid plant of Tianbao Company
• Total sulfuric acid production capacity of 2.2 million tons/year
  [3]

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On December 18, 2025, under the guidance of the National Development and Reform Commission, the China Sulfuric Acid Industry Association and the China Phosphate Compound Fertilizer Industry Association held a special meeting and introduced a number of measures [1][4]:

• Sulfuric acid export enterprises take the initiative to reduce export volumes
• For enterprises that do need to export, the export price shall not be lower than the domestic price in the same period
• Smelting acid enterprises shall stabilize sulfuric acid sales prices at the level of December 11, 2025

• Encourage smelting acid enterprises and phosphate fertilizer production enterprises to sign long-term purchase and sales agreements
• Establish stable upstream and downstream purchase and sales relationships

Starting from December 9, multiple enterprises including Yuntianhua, Xiangyun Co., Ltd., Guizhou Phosphorization, and Xiangfeng Group issued an initiative on ensuring supply and stabilizing prices of phosphate fertilizer products [1].

On December 11, the China Agricultural Means of Production Circulation Association and the China Phosphate Compound Fertilizer Industry Association organized a meeting of key enterprises:

• Recommended that phosphate fertilizer enterprises maintain high operating rates
• Clarified that no exports will be arranged before August 2026

Strategy	Effect Evaluation	Representative Enterprises
Supporting Sulfuric Acid Plants	Best, enables self-sufficiency of raw materials	Chuanfa Longmang, Xingfa Group
Signing Long-Term Agreements	Good, locks in procurement costs	Large-scale phosphate fertilizer enterprises
Product Structure Optimization	Medium, adjusts flexibly according to market conditions	Yuntianhua
Prioritizing Domestic Market	Policy-oriented, positive response	Entire industry

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• The world’s largest DAP importer, with nearly 100% import dependence
• Import volume in 2024 was only 4.65 million tons, a year-on-year decrease of 40%
• High sulfur prices have driven a surge in global phosphate fertilizer prices, hindering India’s procurement [5]

• Strategically fills the market gap left by export restrictions from China and Russia
• Exports of phosphate and derivatives increased by 19.2% in the first three quarters of 2025, reaching 74.65 billion dirhams (approximately USD 6.8 billion) [5]

According to Argus Media analysis:

• Sulfur costs will support ammonium sulfate prices in the first half of 2026
• Ammonium sulfate quotes in the US Corn Belt are USD 20-25/ton higher than the same period last year
• Sulfur costs are approximately USD 194/long ton higher than the same period last year [6]

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• Rigid demand for phosphate fertilizer under the food security strategy
• Enterprises with a high degree of integration have stronger risk resistance capabilities
• New energy material transformation brings valuation reconstruction opportunities

• Sulfur prices remain high, and cost pressures persist
• Policy regulation may affect profit margins
• Strengthening environmental protection requirements increase phosphogypsum disposal costs

Company	Ticker	Core Strengths	Sulfur Self-Sufficiency Rate	Rating
Yuntianhua	600096.SS	Phosphate fertilizer leader, scale effects	Approximately 55%	Overweight
Xingfa Group	600141.SH	Integration of ore, electricity and phosphorus, electronic chemicals	Approximately 65%	Overweight
Chuanfa Longmang	002312.SZ	Complete sulfuric acid supporting facilities, new energy materials	High (2.2 million tons/year capacity)	Attention

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1. Clear Transmission Mechanism:
   Sulfur → Sulfuric Acid → Phosphate Fertilizer, with a transmission coefficient of approximately 0.45, meaning for every RMB 100 increase in sulfur price, phosphate fertilizer cost increases by RMB 45/ton

2. Significant Cost Pressure:
   Sulfur prices have risen from RMB 850/ton to RMB 4,000/ton, leading to an increase of approximately RMB 1,000-1,500/ton in phosphate fertilizer costs

3. Differentiated Industry Impact:
   Enterprises with a high degree of integration (such as Xingfa Group and Chuanfa Longmang) have stronger risk resistance capabilities, while traditional phosphate fertilizer enterprises face profit compression

4. Effective Policy Intervention:
   Sulfur prices have declined somewhat after the supply guarantee and price stabilization meeting, and market sentiment has tended to rationalize

• Sulfur prices will remain high and consolidate, and may surge again to RMB 4,000-4,200/ton during the Spring Festival stocking period
• Phosphate fertilizer enterprises will continue to face cost pressures, and stocking demand before spring ploughing will support prices

• Global sulfur supply-demand contradictions will still exist, and the price center will shift upward
• The advantages of integrated enterprises will become prominent, and industry concentration will increase
• New energy material business will become the second growth curve for phosphorus chemical enterprises

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[1] Jiemian News - “Sulfur Prices Skyrocket, Downstream Industries Panic” (https://finance.eastmoney.com/a/202512203597424164.html)

[2] SunSirs - “Imported Sulfur Prices Have Increased by Over 230% This Year” (https://www.sunsirs.com/commodity-news/petail-29633.html)

[3] Chuanfa Longmang Investor Interactive Platform (https://www.stcn.com/quotes/index/sz002312.html)

[4] Tongling Chemical Industry Group - Industry News (https://www.tlchem.com.cn/industry_news.html)

[5] SunSirs - “Key Events in the Global Phosphate Fertilizer Market” (https://www.sunsirs.com/commodity-news/petail-29633.html)

[6] Argus Media - “Viewpoint: Sulfur costs to support amsul prices in 2026” (https://www.argusmedia.com/en/news-and-insights/latest-market-news/2770651-viewpoint-sulfur-costs-to-support-amsul-prices-in-2026)

[7] Mosaic Company - Q4 2025 Earnings Report (https://ca.investing.com/news/company-news/mosaic-reports-weak-q4-2025-fertilizer-demand-amid-market-challenges-93CH-4405955)

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Report Generation Date: January 18, 2026
Data Sources: Longzhong Information, Zhuochuang Information, Wind Data, Listed Company Announcements, Industry News, etc.